Is What We Buy Really Made In America?
Bottom Line: Who isn’t tired of hearing “supply chain” excuses at this point, right? Nothing exposed US overreliance on Chinese manufacturing, like the pervasive supply chain mess throughout the pandemic. There are three primary reasons supply chain issues aren’t quite the problem they once were. 1) Lower world-wide economic growth/demand 2) With China’s economy in trouble, they’ve relaxed their zero-COVID policy specific to manufacturing 3) Many American companies taking measures to reduce their supply chain exposure to China. That said, here’s there thing. While your point and questions are good ones, the manufacturing process and supply chain have become so complex, there are really two separate questions. What percentage of our goods are manufactured within the United States and how much of what we buy is subjected to supply chain issues? I’ll explain...
Under current law if 55% of a product is manufactured in the United States, it’s considered “Made in America” and can legally be labeled as such (Incidentally, President Biden signed an executive order which raises that threshold to 60% in October). I think most of us see a Made in America label and assume we’re buying something that’s completely made in America. That’s most commonly not the case. If you happened to order something online during the peak of the pandemic that said it was made in America, only to learn it was on back order because parts from China, you were reminded of this nonintuitive reality. It’d perhaps be more appropriate and less misleading, for most labels to read mostly Made in America. While studies have shown large majorities American’s prefer Made in America goods, with up to 80% of Americans saying they’d pay more for stuff that’s truly made here, we’ve made progress in recent years – with big steps having started during the Trump administration's efforts via China-tariff's, the USMCA and incentives for American manufactures. President Biden’s executive action slightly raising the Made in American threshold figures to be marginally effective in moving the ball forward as well. But as for how much is truly “Made in America” vs mostly assembled in America...
According to Commerce Department reporting, approximately 53% of what they coin “final demand for manufactured goods” is made in this country. If you’re looking for stuff that’s 100% manufactured, that number isn’t officially quantified but is certain to be considerably lower than 53%. What that number represents is a fancy way of saying essentially a little more than half of the end product of what we buy is truly “made” here. That number varies heavily based on product and is skewed significantly based on category. Categories range from a low of only 28% of electronics being “made” in the USA while 79% of what we eat is produced in this country. So basically, if you’re trying to figure out what you buy that hasn’t been and usually isn’t affected by foreign supply chain concerns... If you aren’t eating it, it probably is. While it might feel as though the whole Made in America thing is a bit deceptive, our overall manufacturing story is nonetheless impressive.
The US is second in the world in total manufacturing output, accounting for 16.8% of all manufactured goods worldwide (China is first at 28.7%). The US represents just over 4% of the worldwide population, so our manufacturing output is greater than four times the norm. That’s actually a far more impressive story than China which accounts for 18.6% of the world’s population. While quantifying America manufacturing is a bit of tangled web, it’s a fairly impressive one that hopefully will continue to improve on the back of incentives to do so – none the least of which was the supply chain hell all companies which relied on China have experienced since the onset of the pandemic.
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